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Pound drops on worries over UK’s economic prospects

Pound drops

The pound was down 0.12% against the dollar at 1.164 and was 0.53% lower against the euro at 1.156 at the close

The pound drifted further to finish August with its worst month since 2016 amid continued worries over the UK’s economic prospects.

Weakness in the pound – following predictions by Goldman Sachs that a UK recession could continue into 2024 – did not provide respite for the FTSE 100, which fell to its lowest in over a month.

The pound was down 0.12% against the dollar at 1.164 and was 0.53% lower against the euro at 1.156 at the close.

The FTSE 100 ended the day down 74.48 points, or 1.05%, at 7,284.15 amid pressure from energy suppliers and producers.

Michael Hewson, chief market analyst at CMC Markets UK, said: It’s been another disappointing day for the FTSE, with a slide in energy prices weighing on the likes of BP and Shell, with both crude oil and natural gas prices sliding for the second day in succession.

Up until the end of last week the FTSE 100 had been on course for a positive month, however the last three days, and the hawkish tone from Jerome Powell’s Jackson Hole speech, has seen the rug pulled out from underneath the positive mood, he said.

We’re also seeing declines in the likes of National Grid, SSE and Centrica as concerns about a windfall tax on some of their profits resurfaces, he said.

Elsewhere in Europe, the other main markets were also lower as the European Central Bank prepares for a major rate hike.

The German Dax declined 0.97% by the end of the session and the French Cac finished 1.37% lower.

In the US, the Dow Jones opened modestly higher despite the latest ADP jobs report highlighting an unexpectedly low increase in jobs numbers.

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